- FTSE 100 falls 66 points to 8,298
- UK retail sales growth improved last month, led by food and clothing
- Ashtead impresses with quarterly trading update
- Wall Street reopens after long weekend
4.03pm: US manufacturing data disappoints
US manufacturing surveys from ISM and S&P Global this afternoon have both disappointed, showing further contractions in US factory activity.
For the ISM survey, it was a conraction for the 21st out of the past 22 periods.
The deepening sell-off today has not really come as a surprise, says market analyst Axel Rudolph at IG, as US stocks markets historically tend to end in negative territory in September.
The ISM survey underscores the impact of high interest rates, he adds, with traders also eyeing the US employment data later in the week that "might add to the mix and add further pressure to indices which tend to decline in September".
Hitting the FTSE more than most, oil prices are also in "free fall" to nine-month lows, says Rudolph, pointing to demand/supply concerns, with OPEC aiming for higher production quotas and China, the world's largest oil buyer, looking "unlikely to reinvigorate its economy".
But as we head into the final half hour, the FTSE 100's 0.8% fall is overshadowed by 1%-plus declines for continental European benchmarks like the DAX and CAC 40.
Looking to tomorrow, there are results due from housebuilder Barratt Developments, with financials pair Direct Line and M&G also reporting...read the Day Ahead preview.
3.47pm: US sell-off deepens
The sell-off in US stocks is continuing, with the Nasdaq back to where it was two weeks ago.
Losses for the Nasdaq have grown to 2.2%, which would be the worst day in four weeks, while the S&P 500 is down 1.5% and the Dow Jones is down 1.2%.
Nvidia is down 6.5%, lopping $195 billion off its market value, with Intel and Arm down almost 6%, Broadcom down cover 4% and ASML 3.5% at semiconductor sector names bare the big brunt of selling.
Apple and Alphabet are down around 2%, Amazon and Meta have fallen more than 1%.
In Europe, the FTSE and DAX are down more than 0.8%, while the CAC 40 and Ibex are down 0.9% and 1.1%.
3.26pm: HSBC boss puts stress on cost control
Georges Elhedery, the new boss of HSBC Holdings PLC (LSE:HSBA) has stated that cost control is his big priority, as he held his first 'town hall' company meeting since taking the role.
HSBC’s cost base is regularly questioned by banking analysts, who suggest it is higher than peers.
At the meeting, which was held in Hong Kong, Elhedery told local staff that cost is a big focus, but it was more about spending wisely than spending less, Bloomberg reports, citing two people in attendance.
2.53pm: US stocks open lower
US stocks have fallen at the open, led by a 1.3% decline for the tech-heavy Nasdaq.
The S&P 500 has dropped 1% and the Dow Jones by 0.8%, while the small and mid-caps of the Russell 2000 are up 0.7%.
Back in Blighty, the Footsie is down 0.6% and the FTSE 250 is down 0.6%.
2.29am: Chelsea owner's latest signing
Chelsea co-owner Clearlake Capital has agreed to acquire a private credit business from France's Natixis.
This is from the FT, which reports that the US investment group is looking to expand in a fast-growing $1.7 trillion market with the purchase of MV Credit for "several hundred million" dollars.
It will expand assets under management by Clearlake to over $90 billion, up from $2 billion a decade ago.
2.23pm: A sea of red
The FTSE 100 is down over 50 points or 0.6% just ahead of the Wall Street opening bell.
A 3.5% fall in oil prices and declines for mining and banking giants are why.
Oil traders were pointing to reports suggesting OPEC+ plans to proceed with a gradual easing of production cuts in October.
US futures are still in the red, with Nasdaq futures down 0.75% and those for the S&P 500 down 0.6%.
12.59pm: Fractional trading U-turn
HMRC is set to allow ISA accounts to be used for fractional trading, where investors can hold smaller portions of expensively priced shares.
Many trading apps, which are often used by younger investors, already allow fractional trading but HMRC said last year that they did not qualify for tax-free accounts.
The tax authority has reversed its position, the FT is reporting, ahead of an expected change to the law by the UK government later this year, with the move also expected to provide an overall boost in demand for shares (though US stocks tend to be those that are individually priced in the hundreds).
In a statement, HMRC said: “The government has committed to changing the Isa rules to allow certain fractional shares. Taking a pragmatic approach, we will not raise an assessment on managers or investors for fractional shares acquired before these changes are made.”
12.39pm: Oil slides further
Oil prices are sliding ever lower as we enter the second half of the European session.
Brent crude is down 2.4% to $75.64 a barrel, close to year-to-date lows.
Latest sector news today includes Russian crude shipments edging down to their lowest in a month, according to Bloomberg.
Sluggish economic growth in major importer China have offset the impact of Libya halting production and exports.
12.13pm: Eyes on the US
Some comments from market analysts ahead of the US open.
The spike seen on Friday on Wall Street, where stocks barreled higher and the S&P 500 rose over 1% to kiss the old high, was boosted by "window dressing", says Kenny Polcari at Slatestone Wealth, who also provides a bucatini felice recipe at the end of his email to clients.
Anyway, Friday was the end of the month so the window dressing by money managers was seen in the final 10 minutes of trading, pushing stocks up to make it seem like "the angst seen at the beginning of the month is all but a distant memory".
The VIX volatility index is not far above the 15.0 trendline around which it has trundled for most of the past year (apart from the massive spike in early August) which "suggests complacency", Polcari says, with the August to October period tending to be a seasonally weak time of year for stocks.
"There is a lot more that is about to happen," he adds, depending on Friday’s jobs report, which if it comes in as expected, "the algo’s will love it" as it would seal it for a September Fed rate cut them – "and easier monetary policy would go a long way to extending the economic expansion – and that bodes well for earnings growth and that bodes well for the ongoing rotation into value…..think Financials, Basic Materials and Industrials – all strong last week."
Scope Markets analyst Joshua Mahony says the jittery trading in Europe is due to traders continuing to "move with caution in anticipation of the key economic data due in the days ahead", including the US manufacturing data today.
"Elsewhere, this week looks to gradually build towards Friday’s jobs report, with traders on the lookout for additional signs of a potential impending recession.
"Coming off the back of a surprise jump in unemployment that saw the key metric rise to the highest rate since October 2021, the trajectory of unemployment will be crucial in determining the market expectations for the Fed going forward."
11.31am: VW factory closures
Volkswagen Group (XETRA:VOW) is mulling whether to close two factories in Germany as it looks to cut costs while also managing the shift from petrol to electric-powered cars.
The German giant has informed its works council that it may shut down a major vehicle manufacturing plant and a component factory to achieve cost savings.
The potential closures, which would be VW's first in Germany, come as European manufacturers feel increasing competition from Chinese electric vehicle makers, which benefit from lower costs and higher profit margins.
11.23am: European shares slide and US futures down too
European markets are lower too, as are US futures.
While London's blue-chip index is down 0.6%, the DAX in Frankfurt is 0.45% lower, the CAC 40 is down 0.2% in Paris and Madrid's IBEX 35 has retreated 0.7%.
The continent-wide Euro Stoxx 600 is down 0.5%, with Swiss private equity firm Partners Group leading the fallers, followed by London-listed Rightmove.
Ahead of the Wall Street open this afternoon, S&P 500 futures and those for the Dow Jones are both down 0.5%, while Nasdaq futures are pointing to a 0.7% decline.
Nvidia is down almost 2% in pre-market trading, with other chip groups AMD and Super Micro Computer down 1.5%. Other tech giants are mixed, with Apple and Microsoft down 0.3% pre-market, and Tesla is up slightly.
11.06am: FTSE takes a tumble
The FTSE 100 has taken a bigger tumble in the past hour, down 0.5% to 8,321.
Sizeable falls for oil and mining heavyweights is the reason.
Oilers Shell and BP are down 1.7% and 1.8%, while Glencore, Fresnillo and Anglo American are all down around 3%.
Banks NatWest and Barclays are both down around 1.5% too.
10.41am: Terry Smith flagship falls out of top list
Fund management star Terry Smith's Fundsmith Equity saw its popularity wane last month, dropping out of the top 10 investments on the UK's second-largest platform for the first time.
Interactive Investor (ii) said it was the first time Fundsmith has not been among its most popular funds since it began tracking its most-bought investments in 2018.
Smith has seen the fund underperform its benchmark for three successive years, with a return to positive performance last year but some missteps that have brought criticism.
Kyle Caldwell, ii's funds and investment education dude, says Fundsmith Equity "had an incredible run" and "long-term investors of the fund will surely have no complaints as it has comfortably outperformed the wider global market and the vast majority of global fund rivals since launch in November 2010".
He says Smith, like other professional investors, "is continuing to face into the headwind of global stock market returns being heavily influenced by a small number of US technology companies".
The most bought fund was a passive one, L&G Technology Index, which has just over 40% of the fund in Apple, Microsoft and Nvidia.
Caldwell says holding this fund "could spell trouble for investors who are overexposed to technology should there be a sharp correction", with investment trusts Polar Capital Technology Trust PLC (LSE:PCT) and Allianz Technology Trust PLC (LSE:ATT) also popular in the investment trusts category.
10.10am: M&A down in second quarter
UK mergers and acquisitions fell in the second quarter, according to the latest update from the Office for National Statistics.
The provisional number of domestic and cross-border M&A was 385 in the second quarter, which was down 78 on the first three months of 2024.
April saw an estimated 148 deals involving a change in majority ownership, before falling slightly to 144 in May and declining further to 93 in June.
The value of foreign companies acquiring UK companies was £5.0 billion, the ONS said, down from £5.6 billion in the first quarter, while outward M&A fell to £4.2 billion in the second quarter from £4.6 billion in the first.
Domestic M&A totalled £2.6 billion, down £1 billion from the first quarter.
My first guess is the general election might have slowed things a bit.
9.57am: Senior civil servant backs Labour's 'black hole' claims
A big story for Chancellor Rachel Reeves has broken in the last couple of hours.
It comes after her claims of a £22 billion "black hole" in Britain’s public finances in July, which has led the new government to cut some spending plans and is expected to lead to some tax hikes in the autumn statement next month.
Jeremy Hunt, the former Chancellor wrote to Cabinet secretary Simon Case, the UK's top civil servant, after the speech to say the claims were "deeply troubling" as they appeared to contradict government spending estimates published by the Tories shortly beforehand.
But a letter in reply from Case to Hunt, leaked to newspapers this morning it seems, says the Conservative's failure to hold a spending review contributed to the uncertainty and denied allegations that the new Labour government’s claims were bringing the civil service into "disrepute".
9.28am: Oil price drop hits FTSE
Oil titans Shell and BP are in the red, limiting the gains of FTSE 100 this morning, after a sharp fall in oil prices.
Brent crude futures tumbled 1.2% to $76.58 a barrel in recent minutes, while US WTI is down 1.4% at $73.26.
Falls for mining companies have also been holding the blue-chip index for the second day in a row, as well as declines for housebuilders.
Anglo American PLC (LSE:AAL), Persimmon PLC, Glencore PLC, Fresnillo PLC, Taylor Wimpey PLC and Rio Tinto PLC are the bottom of the blue-chip list, down between 1.4% and 1.2%.
Berkeley Group Holdings PLC (LSE:BKG), Barratt Developments PLC (LSE:BDEV) and property developer LondonMetric are also lower.
Rightmove is also down 1.1%, after rising over 20% yesterday when Australia's REA Group said it was considering making a bid.
9.14am: Japan worth watching
The yen "carry trade" and Japanese interest rates are gaining a lot of attention this morning, says market analyst Kathleen Brooks at XTB.
This is after the governor of the Bank of Japan wrote a letter to the Japanese government, explaining the decision to raise rates in July where he said the central bank will continue to raise interest rates "if the economy and prices perform as expected".
In carry trades, investors borrow in a low-interest currency, such as the Japanese yen, to invest in a higher-interest one like the dollar is at the moment, profiting from the interest rate difference while potentially benefiting from currency appreciation.
"The yen is higher on the back of these comments, and USD/JPY is testing the 146.00 level," says Brooks, noting that the yen is the top performing G10 currency today.
"The yen story is worth watching closely," she adds. "Some analysts believe that rising Japanese interest rates could be the canary in the coalmine for the current stock market rally and may trigger unexpected volatility.
"There is some excitement that Japanese investors will trigger a wave of capital flowing out of the West and back into Japanese capital markets, alongside an end to the carry trade."
However, while some 're-shoring' of Japanese investors' capital may be expected, Brooks says "we do not think that this should induce any panic or risk aversion.
"The Japanese respect diversified portfolios, a lot of their foreign investments may be locked in for some time, and Japan’s demographics means that investment flows from Japan to Europe and the US will not dry up."
8.53am: Mid-cap risers
Top riser on the FTSE 250 is Watches of Switzerland Group PLC (LSE:WOSG) after its update this morning, where it marked calendars for next March's grand opening of its twice-delayed new flagship Rolex boutique on Old Bond Street, London.
The luxury watch merchant also maintained full-year guidance set out in July and said it was increasing showroom stock levels in the US in the first half to "enhance displays and client experience".
Shares are up 9%.
Another more turbulent riser is Wizz Air Holdings PLC (AIM:WIZZ), though the shares have been up and down in the first hour, currently 0.7% higher.
This is off the back of a monthly update where the Eastern Europe and Middle Eastern flights group said it carried a record number of passengers in August despite the ongoing effect of groundings due to Pratt & Whitney engine issues.
Just over 6.2 million people flew with the airline in August, up 1% on a year earlier, as load factors climbed 1.3% to 95.4%.
Ryanair also reporting a record month for traffic this morning, with load factor still at 96%.
8.45am: 'Some concerns' about Rolls
On Rolls and Cathay, analyst Christophe Menard at Deutsche Bank says: "While the news raises some concerns, our preliminary analysis is that the financial liability could be contained."
He says his "positive view of the equity story is unchanged", keeping a 'buy' rating.
Kathleen Brooks, market analyst at XTB, says: "If we see more news flow that suggests RR is not at fault, expect a stronger recovery in the stock price."
She notes that in the year to date, Rolls is still the best-performing stock on the UK market and is higher by more than 60%.
8.38am: Rolls higher
Rolls shares are up 4.6% today, almost back to where they were at the end of last week.
There's been an update from Cathay Pacific this morning, which says it expects to resume full operations of its Airbus A350 planes by Saturday, when the inspection of its aircraft fleet is expected to be completed after the failure of a component in a Rolls-Royce Trent XWB-97 engines mid-flight yesterday.
The Hong Kong-based carrier said in a statement this morning that it had identified 15 of the A350 aircraft with affected components that needed to be replaced, of which three had already been repaired.
The FT is reporting this morning that the airline was inspecting fuel lines inside the engines, citing two people familiar with the matter.
A Rolls-Royce statement told the BBC that "it is committed to working closely with the airline, aircraft manufacturer and the relevant authorities to support their efforts."
"As well as providing support and guidance to Cathay Pacific, Rolls-Royce will also keep other airlines that operate Trent XWB-97 engines fully informed of any relevant developments as appropriate."
8.15am: Ashtead profits down in line with forecasts
Ashtead Group PLC (LSE:AHT) first-quarter results show pre-tax profits down 7% to US$573 million, which is in line with consensus forecasts.
What's probably lifted the shares to the top of the FTSE 100 leaderboard is that the company retained its full-year headline guidance, with the key component being US business Sunbelt's expected rental revenue growth of 4-7%, with gross capital expenditure of $3-3.3 billion.
Analyst Andrew Nussey at Peel Hunt said "the key news today is that the company's well-respected CFO is to retire in 2025, with a US-based successor announced".
8.10am: FTSE 100 starts on front foot
The FTSE 100 has opened higher, surprising for the second day, with a gain of 13 points to 8,377.
Top risers are Ashtead Group PLC (LSE:AHT) after its trading update this morning.
Second is Rolls-Royce Group PLC, rebounding after a sharp fall late in yesterday's session (see below).
7.59am: UK consumers more confident or more cautious?
Some thoughs on the retail sales data from economist Rob Wood at Pantheon Macroeconomics and Clive Black at Shore Capital.
Wood says better weather boosted sales volumes, noting that the average temperature was 0.5% above average, "but the underlying trend remains one of gradually improving retail sales volumes growth as inflation slows and rising real incomes boost consumer spending".
The improvement in the BRC-KPMG data "should translate into strengthening volumes growth as goods price inflation has been slowing", with the BRC shop price index having fallen 0.3% year-over-year in August compared to a rise of 1.4% on average in the first half of the year.
Shore Capital's head of research and retail sector specialist, Clive Black, says the retail sales monitor survey "showed some resilience compared to a weak summer run-rate but in the big scheme of things was quite mellow" and he sees a "more cautious mood" emerging.
A rise in food sales helped the overall figure, as non-food was in negative territory. Non-food online gained a little market share, which Black says implies a "weaker still performance" for non-food stores.
"From a promising and hopeful start, the leaders of the new government have spoken to tough decisions ahead around the 30 October Budget, a narrative that may weigh on near-term UK consumer sentiment, whilst the big fiscal event will, whatever emerges, set the tone for the run into Christmas.
"A more cautious mood is emerging, one that will be underscored if the MPC believe that inflationary forces, such as UK Government initiated wage awards, make cutting base rates slower than previously thought."
7.43am: UK retail sales edge higher
More details on the UK retail figures from the British Retail Consortium and KPMG, which came out overnight and showed consumer confidence improving slightly, helped by the weather.
This showed total sales volumes in August were up 1.0% on a year ago, improving from the 0.5% growth seen in July and the three-month average of 0.4%.
For August, food sales rose versus last year but non-food was in decline, despite high street clothing sales growing for the second month in a row.
Online non-food sales increased by 1.5% in August, an improvement on three-month average growth of 0.3% and an average decline of 1.8% over the past 12 months.
“Despite summer finally making an appearance, and a slight uptick in consumer confidence, shoppers did not catch-up their spending during August, with total sales growth of only 1% reflecting the challenging retail environment that is likely to dominate for the rest of this year," said Linda Ellett, KPMG's UK head of consumer, retail & leisure.
7.31am: Rolls engines being inspected after in-flight failure
Yesterday Rolls-Royce shares fell sharply, which looks now like it might be related to an in-flight failure on a Cathay Pacific flight.
The Hong Kong airline has halted 24 flights, according to Reuters, to inspect all its Rolls-Royce powered Airbus A350 jets following the failure of an engine part on Monday.
A part failed on one of its A350-1000 widebody planes minutes after take-off from Hong Kong, though the newswire said other airlines have not yet been issued instructions to examine similar engines.
7.16am: FTSE 100 to head lower again
The FTSE 100 looks to be heading lower again on Tuesday, but with market activity expected to pick up later as the US returns from a long weekend and more traders return from holiday.
Futures markets are pointing to a small fall for the London benchmark, around six to eight points at the open, after the index dropped almost 13 points at the start of the week to finish at 8,363.8.
Analysts say yesterday's subdued European stock markets reflected higher bond yields, partly influenced by some upward revisions to economic data, leading investors to dial back expectations for aggressive rate cuts from the European Central Bank.
Looking to today, we've had UK retail data out overnight from BRC-KPMG, which showed improvement after a weak summer, with total sales up by 1.0%.
Later, there will be some US data that could provide a big injection in market volatility, according to Deutsche Bank macro strategist Jim Reid, who says now we're into September, "it's back to the serious stuff with the market soon to be fully staffed again with schools fully back over the next few days".
Ahead of the important US official job report print on Friday, today we see the ISM and PMI manufacturing report, which Reid says "will be interesting" as both are expected to stay below 50, which indicates contraction, where they've been for most of the last couple of years.
"The headline ISM printed at 46.8 last month which was below every economists' estimate, with the employment subcomponent (43.4) at its lowest since the initial Covid shock.
"This helped kick start the chain of events that culminated in the VIX printing above 65 and Japanese equity markets being down over -10% on the Monday the following week just after the weak payrolls number. So it is important to see if that ISM release was distorted or not," he says.